AVCAL hits out at disclosure plans

Private equity should receive a specific exemption from Australia’s proposed public disclosure of portfolio company information, according to industry trade body the Australian Private Equity and Venture Capital Association Limited (AVCAL).

Under proposed reforms, Australian superannuation funds will be required to publicly disclose information such as fees and costs payable by the fund and asset allocation percentages. In addition, every six months the supers will need to identify all of their direct or indirectly held assets and each asset’s current value on their website.

But AVCAL is calling for private equity to be exempt from disclosing this information as the trade body believes it could limit investment in private equity from super funds.

“We have already observed at least one superannuation fund in recent months which was unable to invest in a sought-after, top-tier foreign PE fund solely on the basis of the impending look through disclosure obligations, thus missing out on a potentially attractive investment,” said an AVCAL statement.

AVCAL says the requirement to publicly disclose the value private equity holdings could have a negative impact on the performance of those investments. For instance, public disclosure of the book value would adversely affect the GP’s ability to get a sale price above the book value, putting GPs at a significant commercial disadvantage in negotiations with potential buyers.

The proposed reforms have yet to be finalized and other models are being considered. As such AVCAL would like to see the current deadline for the proposed reforms, July 1 2014, deferred.

The trade body argues both super funds and GPs need more time to prepare the data, and also finalize the relevant renegotiations of fund terms and set up the appropriate reporting templates and processes.